Our investing blueprint traces its roots in both its founding family’s legacy and the Hermoy farmland country where Standard was originally incepted.
From the first it inherited a resolute set of values, and from the second the nimble, no-nonsense spirits that have shaped its operating principles.
Investing-wise, our natural preference is to acquire shares in growing companies run by proven owners-operators. We’re looking for strong customer franchises that can earn high rates of return on shareholders’ capital over the long run, with limited recourse to leverage and ideally some untapped pricing power—provided, of course, that these opportunities get accessible at compelling valuations.
We may from time to time diverge from this framework and pursue an alternative course of action, for instance against a backdrop of complete market dislocation when we identify situations that combine superior management teams, outstanding assets and severely distressed valuations. This particular yet not uncommon set-up can even get us involved with a temporarily troubled enterprise.
In all cases, our portfolio management comes down to these essential characteristics:
1. A careful selection of a few investments chosen in relation to the discrepancy between their price and intrinsic value; to the quality and integrity of their management teams; and to the alternative investments available at the time.
2. A steadfast holding of these large commitments through thick and thin until either they have fulfilled their promise or it is evident that they were purchased on a mistake.
3. A balanced investment position—that is, a variety of risks in spite of individual holdings being large, coupled with sizeable reserves of cash always at hand to absorb financial shocks and maintain optimal latitude of action.
Our philosophy is to always keep an open mind, with an approach that should best be described as purposely simple and driven by pure opportunism. We have no strategic agenda or long-term plan other than doing sensible things, pouncing with vigor on those rare opportunities that fall into our modest circle of competence whenever and wherever they surface.
Adhering to tested investment principles, we believe in detaching ourselves from volatility concerns, for the market is here to serve us, not to instruct us; in thinking independently and having the courage to side against the consensus when conviction and reason command it, for buying when others are despondently selling requires the greatest fortitude but pays the greatest rewards; and in demanding a substantial margin of safety in every capital commitment we contemplate.
We, like our partners and the diverse group of institutions and families we advise on some occasions, are always looking forward to connecting with like-minded entrepreneurs and investors. If you share a similar approach than ours in your own business endeavors, or wish to discuss a specific opportunity, we would certainly be thrilled to hear from you.